Two new variables, the market value of the firm (a measure of firm size, in millions of dollars) and stock return (a measure of firm performance, in percentage points), are added to the regression: In(Earnings) = 3.86-0.28Female +0.37In(MarketValue) + 0.004 Return, (0.03) (0.04) (0.004) (0.003) n = 46,670, R² = 0.345. If MarketValue increases by 0.82%, what is the increase in earnings? If Market Value increases by 0.82%, earnings increase by The coefficient on Female is now -0.28. Why has it changed from the first regression? OA. Female correlated with the two new included variables. 0.30 % (Round your response to two decimal places.)
Two new variables, the market value of the firm (a measure of firm size, in millions of dollars) and stock return (a measure of firm performance, in percentage points), are added to the regression: In(Earnings) = 3.86-0.28Female +0.37In(MarketValue) + 0.004 Return, (0.03) (0.04) (0.004) (0.003) n = 46,670, R² = 0.345. If MarketValue increases by 0.82%, what is the increase in earnings? If Market Value increases by 0.82%, earnings increase by The coefficient on Female is now -0.28. Why has it changed from the first regression? OA. Female correlated with the two new included variables. 0.30 % (Round your response to two decimal places.)
Chapter4: Linear Functions
Section: Chapter Questions
Problem 30PT: For the following exercises, use Table 4 which shows the percent of unemployed persons 25 years or...
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please answer the third and fourth part
Transcribed Image Text:Two new variables, the market value of the firm (a measure of firm size, in millions of dollars) and stock return (a measure of firm performance, in percentage points), are added to the regression:
If Market Value increases by 0.82%, what is the increase in earnings?
If MarketValue increases by 0.82%, earnings increase by
The coefficient on Female is now -0.28. Why has it changed from the first regression?
A. Female is correlated with the two new included variables.
B. The first regression suffered from omitted variable bias.
C. MarketValue is important for explaining In(Earnings).
D. All of the above.
0.30
ou
Let X = Female, u = MarketValue, and - = 0.48.
ox
The correlation between Female and In(MarketValue), Pxu' is
Are large firms more likely to have female top executives than small firms?
A. Yes.
B. No.
OC. There is no relationship between the genders.
In(Earnings) = 3.86 -0.28Female + 0.37In(MarketValue) + 0.004 Return,
(0.03) (0.04)
(0.004)
(0.003)
n = 46,670, Ŕ² = 0.345.
%
Assume that the coefficient estimated in the second regression is correct. Forget about the effect of the Return variable, whose effect seems small and statistically insignificant. Calculate the correlation between Female and In(Market Value) using
the omitted variable bias equation¹.
(Round your response to two decimal places.)
(Round your response to three decimal places.)
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